Can Square Secure Bank Licensing This Time Around?


Jan. 30 2019, Updated 10:30 a.m. ET

Addressing regulators’ questions

Square (SQ) is again seeking bank licensing. The company is interested in operating an industrial bank, which would allow it to expand its operations targeted at businesses. As Reuters reported, Square first applied for a bank license in September 2017, but it withdrew the application last year to address questions raised by regulators.

Article continues below advertisement

Square eyeing the business market

Square’s industrial bank unit is set to operate as Square Financial Services, mainly serving businesses through loans and deposit accounts. While Square is seeking a bank license, PayPal (PYPL) has chosen to partner with banks to provide banking services such as loaning to consumers and businesses. Last year, PayPal completed the sale of its US consumer lending business to Synchrony Financial (SYF).

Amazon may also have plans to enter banking. Last year, The Wall Street Journal reported that Amazon (AMZN) was exploring the creation of a checking-account-like product for retail customers. The report stated that Amazon had discussed partnering with big banks such as JPMorgan Chase (JPM) and Capital One Financial (COF) for the product.

Becoming a one-stop-shop for financial solutions

For Square, operating a bank could bring it closer to its goal of becoming a one-stop-shop for financial solutions. Square’s business has expanded a great deal in recent years—in addition to processing payments for merchants, it offers loans to consumers and businesses and runs a bitcoin exchange.

Including a one-time gain tied to an Eventbrite investment, Square reported a $20 million profit in last year’s third quarter. Excluding that gain, it had a $17 million loss.


More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.